The State Bank of Vietnam (SBV) cut the refinancing rate 100 basis points to 14.00% from 15.00% previously; also cutting the inter-bank rate to 15.00% and discount rate to 12.00% by the same margin. The SBV said: "In response to the guidelines of the Government... on key solutions to realize the socio-economic development plan and state budgeting for 2012; on the basis of the downward trend of inflation and the capital supply-demand of the market, the Governor of the State Bank of Vietnam has issued Decision... to reduce key interest rates and maximum VND deposit interest rates for entities and individuals at credit institutions and foreign bank branches"
Last year the State Bank of Vietnam implemented a number of measures to counter inflation including rate hikes, a cap on bank deposit rates, an increase to the required reserve ratios on foreign currency by 100 basis points in June last year and lifted dollar reserve ratios 100 basis points in August. The bank also increased its reverse repurchase interest rate by 100 basis points to 15.00% in May last year, and subsequently reduced the OMO rate by 100 basis points to 14.00%.
Vietnam reported annual inflation of 18.1% in December, 22.42% in September, 23.02% in August, 22.16% in July, 20.82% in June, 19.78% in May, and 17.51% in April last year, according to the General Statistics Office. Vietnam's annual GDP growth rate averaged about 6 percent through 2011. The Vietnamese Dong (VND) is currently trading around 20,823 against the US dollar.
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